Sri Lanka's trade deficit narrows by over 4% in 2012

The country's balance of trade stood at USD 9.31 billion for 2012 compared to USD 9.71 billion in 2011-end.

Updated: Feb 11, 2013, 16:03 PM IST

Colombo: Sri Lanka's trade deficit in 2012 narrowed by over 4 percent to USD 9.31 billion on the back of decline in imports and double-digit growth in tourism earnings as well workers' remittances, its Central Bank said Monday.

The country's balance of trade stood at USD 9.31 billion for 2012 compared to USD 9.71 billion in 2011-end.

"Although earnings from exports declined in 2012 along with the weakening of global demand, the deficit in the trade account of the balance of payments contracted in 2012," a statement said.

Lower import expenditure in respect of vehicles has continued to make a significant contribution to deceleration in total expenditure on imports in 2012, the bank said.

In April last year, the government had slapped prohibitive import taxes on vehicles, a measure taken with a view to preserve dwindling foreign reserves.

In December 2012, the country recorded its highest-ever monthly earnings from tourism recorded at USD 133.5 million.

For the year 2012 as a whole, earnings from tourism totalled USD 1.03 billion, an impressive growth of 25.1 percent. This is the first time that earnings from tourism exceeded USD one billion in a calendar year.

Inflows from Sri Lanka expat workers increased by 9.3 percent year-on-year in December 2012. For entire 2012, workers? remittances recorded a growth of 16.3 percent.

Foreign investments at the Colombo Stock Exchange in 2012 resulted in a net inflow of USD 305 million compared to the net outflow of USD 171 million in 2011.

There has also been a significant increase in foreign investments in government securities, with net inflows to Treasury bills and Treasury bonds during 2012 amounting to USD 843 million compared to net inflow of USD 233 million in 2011.

Foreign Direct Investment amounted to USD 615 million for the first nine months of 2012.

The Board of Investment had set a USD 1.7 billion FDI target for 2012 lower than the USD 2 billion projected by the Central Bank.